Your credit history is a key factor to your financial success story. A rating typically between 300 and 850, a credit score is provided by the credit bureau and determines your eligibility for credit cards, mortgages, and other loans. If you have a good credit score, you have more and less expensive financing options.
Here are a few tips to improving your credit score:
1. Pay your bills early or on time and in full
One of the most important components of your credit score comes from your bill paying history. This includes but not limited to mortgages, auto and student loans, medical bills, and utilities. Therefore, avoid late payments and always pay your bills early or on time and in full.
2. Always keep a low to no balance on credit cards
Your credit card balance provides great insight to a creditor. If there is outstanding debt with large balances, it will adversely impact your credit score. So instead of paying the minimum due or avoiding payments, keep credit card balances low or pay balances in full each month.
3. Cut up credit cards but don’t close the accounts
Leave inactive or unused credit card accounts open since lenders look at your debt to available credit ratio. Hence, if you don’t close your old or unused credit cards, it will help to raise your credit score.
4. Avoid applying for multiple accounts at once
Don’t apply for multiple or too many credit accounts rapidly. Too many credit inquiries raise a risk flag and, in turn, have a negative effect on your credit score.
5. Pay your parking tickets and library fines
Surprisingly, unpaid parking tickets and library fines can cause damage to your credit score. If you have any due, pay them as soon as you can. The amount may be small but they can place a high price on your credit worthiness.
Financial discipline and good planning are essential to having a good credit score. Following the tips mentioned here will help enhance your credit score and open doors to better financing should you ever need.